{"id":11372,"date":"2023-08-24T11:32:16","date_gmt":"2023-08-24T11:32:16","guid":{"rendered":"https:\/\/iqeq.com\/?p=11372"},"modified":"2023-08-24T11:32:19","modified_gmt":"2023-08-24T11:32:19","slug":"mifidpru-remuneration-code-disclosure-and-interaction-with-other-remuneration-codes","status":"publish","type":"post","link":"https:\/\/iqeq.com\/insights\/mifidpru-remuneration-code-disclosure-and-interaction-with-other-remuneration-codes\/","title":{"rendered":"MIFIDPRU Remuneration Code disclosure and interaction with other remuneration codes"},"content":{"rendered":"
\n
\n

By Katrina Cockram, Senior Compliance Consultant, UK<\/em><\/p>\n

The remuneration code disclosure requirements for MIFIDPRU investment firms are set out in MIFIDPRU 8<\/a> of the FCA Handbook, replacing the Pillar 3 requirements of BIPRU 11. They are now in effect for remuneration periods starting in January 2022. In this article, we\u2019ll examine the scope and detail of the MIFIDPRU Remuneration Code disclosure and how to balance its requirements with those of other remuneration codes. \u00a0<\/strong><\/p>\n

Purpose and scope of the MIFIDPRU Remuneration Code disclosure<\/h2>\n

The purpose of the disclosure remains broadly the same, requiring firms to disclose certain information to key stakeholders and counterparties, but requirements have been expanded to include disclosures on each firms\u2019 own funds (financial strength), behaviour (investment policy) and culture (risk management, governance and remuneration).<\/p>\n

That being said, most of the new disclosure requirements apply only to firms that are not Small and Non-Interconnected (non-SNI), with the key exception being disclosures on remuneration policy\/practices. SNI firms with additional Tier 1 instruments must also make disclosures with respect to risk management and own funds.<\/p>\n

Most private equity (PE) and venture capital (VC) firms, which are subject to the MIFIDPRU code, are generally advisors or collective portfolio management investment (CPMI) firms, both of which are classed as SNI firms.<\/p>\n

What happens when a firm is subject to more than one remuneration code?<\/h2>\n

The FCA states in SYSC 19G that where a firm is subject to the MIFIDPRU Remuneration Code and another, different, remuneration requirement, where only one can be complied with, a firm must use the most stringent of the relevant provisions.<\/p>\n

This is relevant to firms subject to the various requirements of the\u00a0MIFIDPRU Remuneration Code as well as the\u00a0AIFM Remuneration Code and\/or the\u00a0UCITS Remuneration Code.<\/p>\n

The issue is not relevant where a firm can comply with both sets of remuneration requirements applied to them in tandem; for instance, where a staff member\u2019s work is entirely focused on a CPMI firm\u2019s alternative investment funds, in which case only the AIFM Remuneration Code would apply to that staff member.<\/p>\n

What are the most stringent provisions and how should they be applied?<\/h2>\n

Every firm should use its judgement to achieve a level of disclosure that is appropriate to its size and internal organisation and to the nature, scope and complexity of its activities.<\/p>\n

The key issue with deciphering the \u201cmost stringent\u201d requirements is that the different remuneration code provisions are not directly comparable. While AIFMD supersedes most provisions for SNI firms, a non-SNI firm may have further qualitative provisions that need to be satisfied under MIFIDPRU 8.<\/p>\n

One way to assess the two remuneration codes is to compare the key requirements set out in each.<\/p>\n <\/div>\n<\/section>\n\n

\n
\n
\n
\n
\n

AIFMD Remuneration Code requirements<\/p>\n

<\/div>\n <\/div>\n
\n
\n